Kames’ Snowden: Why you should not wait for market dip

Big macro calls on asset allocation could be a fool’s errand as the UK economy and markets enter a prolonged period of stability, according to Kames’ Stephen Snowden.

Kames' Snowden: Embracing volatility as an active bond manager


Snowden, recently appointed co-head of fixed income following the departure of long-standing managers Phil Milburn and David Roberts, said it was not a foregone conclusion that the UK was set for a downturn and higher volatility, despite the headwinds in the distance.

It means a lot of managers are cautiously waiting to buy in a market dip that may not come, he said.

Kames, on the other hand, remains overweight in the corporate bond sector.

“Managers have been underweight waiting to buy which means more people will buy eventually. We remain overweight corporate bond spreads,” Snowden said.

“Everyone is looking to call the next market fall. There’s those thirsty from a professional point of view to get the fall right.

“We are as likely to have a period of stability as a period of volatility. I think there’s no reason why we should not be in for two years of stability.”

Despite the past 10 years throwing up a number of market crashes and dips, Snowden pointed to the long periods of stability in the mid-1990s and the mid-2000s, both following major periods of volatility, as evidence that the market can steady itself.

“Since the financial crisis it has been popular to asset allocate from the big macro plays. But then nothing happened in 2017. It has been a dull year,” he added.

He said: “Those that have been trading for the fall will find themselves with nothing to do.

“It will be a very, very difficult situation for the large funds.”

Post-Milburn and Roberts at Kames

Since the departure of Milburn and Roberts little has changed for Snowden with his job “unchanged”, he said.

The investment process has remained the same, and he is still heavily involved in running money as his fellow co-head, Adrian Hull, is not regulated to do so.

Hull is tasked with the more ‘bureaucratic’ business management side of the job.

“It would be more difficult if we were both fund managers, we would have needed to have a proper division of tasks,” Snowden said.

“It’s a real shame losing Phil and David but if there was anything good to come from it is the chance for people in Kames to progress.

“The worst thing we could have done was say ‘there’s no body capable of replacing them’ so bring someone in from outside.

“They would not have got our culture or way of working. One of the things I have noticed in my time is that a new broom likes to make a clean sweep. We have avoided that kind of upheaval.”